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Disappointing jobs numbers hurt TSX

By Linda NguyenThe Canadian Press

Fri., Aug. 9, 2013

North American markets ended in the red Friday amid a mixed bag of quarterly financial reports and signs that Canada’s private sector added jobs last month even as the overall unemployment rate rose in June.

The S&P/TSX composite index dipped 10.79 points to 12,542.13. The Canadian dollar was up 0.28 of a cent to 97.14 cents (U.S.).

On Wall Street, the Dow Jones industrials index dropped 72.81 points to 15,425.51, the Nasdaq dipped 9.02 points to 3,660.11, while the S&P pulled back 6.06 points to 1,691.42.

An onslaught of positive economic data from China was not enough to lift the markets, as figures showed that Chinese inflation in July was steady at an annual rate of 2.7 per cent — slightly below an expected modest increase to 2.8 per cent.

Chinese industrial production also rose 9.7 per cent in the year to June, ahead of expectations for a nine per cent increase and retail sales grew 13.2 per cent in July from a year earlier, slightly slower than June’s growth rate.

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Overall, analysts said the figures added weight to the argument that the recent soft patch in the economic powerhouse may have come to an end. However, market reaction was fairly muted, as stocks had rallied already on Thursday after strong Chinese trade numbers.

“I think the market is unwilling to jump in with both feet simply because a number of good numbers came in overnight from China,” said Andrew Pyle, associate director of wealth management for Scotia MacLeod.

“You have a market now that is tired. We’ve been through the second quarter of the U.S. earnings season… You have a market now that is searching for the next reason to stay positive and I think you’re starting to see some of that fatigue.”

Meanwhile, a double-dose of economic news was also released in Canada, potentially indicating that the economy wasn’t firing at a pace that some have come to expect.

Statistics Canada reported a net loss of 39,400 last month, with public sector workers and youth taking on the biggest share of the losses. On a positive note, however, Canada’s private sector employers added 31,400 jobs.

The official unemployment rate is now 7.2 per cent, one-tenth of a point higher than in June.

The Canada Mortgage and Housing Corp. also reported that total housing starts continued to be relatively stable in July.

The federal agency estimated there were 17,993 actual starts in July which, extrapolated over 12 months, totals a seasonally adjusted annual rate of 192,853 starts. That was slightly down from June’s adjusted annual rate of 193,797.

On the TSX, BlackBerry shares rose more than seven per cent, or 68 cents, to $10.05 on a report that the smartphone-maker’s chief executive and board of directors are warming to the idea of taking the company private.

The reports by Reuters said no decision was imminent and BlackBerry issued a brief statement saying it doesn’t comment on rumours or speculation.

Meanwhile, autoparts giant Magna International Inc. reported a $415 million (U.S.) profit and record-high second-quarter sales, which were up 16 per cent from the same time last year and well above analyst estimates.

Magna also said it now expects between $33.3 billion and $34.7 billion of sales in 2013 — about $700 million higher than Magna’s outlook in May. Its shares were ahead $2.15 to $82.30.

Brookfield Asset Management Inc. reported a profit of $802 million (U.S.), up from $379 million a year ago. Despite the positive earnings, its shares dipped 59 cents to $37.99.

The TSX gold sector ended ahead up 1.68 per cent as December gold bullion gained $2.30 to $1,312.20 (U.S.) an ounce. Shares in Centerra Gold climbed more than 10 per cent, or 44 cents, to $4.74, while Barrick Gold shares were ahead 40 cents to $18.00.

The energy sector fell 0.09 per cent as September crude contract on the New York Mercantile Exchange moved up $2.57 to $105.97 (U.S.) a barrel.

The metals and mining sector was the leading advancer in the market, climbing 4.05 per cent as copper added four cents to $3.31.

Shares in First Quantum Minerals were up 81 cents to $17.93, while Teck Resources saw an uptick of $1.02 to $27.33.

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